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Exiting a “Time and Place” Business

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
1 month ago

“The purpose of middlemen in the marketplace is to provide time and place utility.” I remember the light bulb going on in Economics 101 when my professor said that.  Suddenly, I understood the concept of added value. Someone had to get the product to the customer. “After all,” the professor continued, “The footwear manufacturer in Massachusetts can’t sell a pair of shoes directly to someone in California. They can’t manufacture and handle thousands of customers. It would be a nightmare, and completely unprofitable.” The fact that Massachusetts was still known for shoe manufacturing gives you some idea of how long ago this took place. So long ago, in fact, that Zappos wasn’t even a word yet. The independent shoe retailer gave way to the department stores. In turn their shoe business was decimated by the specialty chain retailers. In fact, most shoe departments in Macy’s and others are actually chain operations within the store. Shoe sales moved into sporting goods stores and discounters. While the industry shifted multiple times, they all still provided time and place utility. Then came the Internet. Now the manufacturer can sell directly to consumers. In fact, they can eliminate several layers of middlemen, along with the mark-ups. Lately my area has been swamped with billboards saying “Mattress Dealers are Greedy. TN.com.” TN.com turns out to be My friends at Digital Pro has survived (and thrives) by their differentiation and service. The large, bright showroom is full of computers where they can show customers the effect of adjusting color balance or editing. They can print your lifetime memories on almost anything, from a key chain to a large metal panel. They can still give you prints made with permanent liquid ink, not the water soluble powder used by most printers. In addition, they can do all of this online because they’ve invested in the technology necessary to keep up with the “convenience-based” competitors. As the cost of digital printers fell, professional photographers invested in their own machines. Digital Pro Lab has replaced their business with consumers who want to discuss their special moments, choose how to preserve them, and hold the results in their hands before they pay. In an industry where the number of time and place based outlets has fallen by over 90% in the last decade, Digital Pro Lab has beaten the big boys with product differentiation and service. When the time comes for planning an exit, they will have options.       This article was originally published by John F. Dini, CBEC, CExP, CEPA on

Is Google Making Us Stoopid?

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
4 months ago

As an Exit Planner, most of my engagements involve assessing a management team. They may be the intended buyers of the company, or else they are key factors in the saleability of the business. The biggest and most frequent complaint I hear about managers is that they don’t know how to THINK. Business owners lament the inability of employees to discern critical paths, assess alternatives, or analyze complex problems. Examples of Thinking Shortfalls A CPA is doing final review of a client’s tax returns, as prepared by an associate. As with many business owners, the client has two related entities, one acting as the management company for the other. The reviewing partner notices the income from management fees in the one entity, but no corresponding expense deduction in the other. The associate’s explanation is that the client’s books didn’t show the offsetting expense, so he ignored it. The owner of an IT services company receives an irate call from a client. His technician has just spent two billable hours on the client’s PC, and it still won’t print his documents. When the employee is asked for an explanation, he points out that the client said he needed updates to his printer drivers, and that is exactly what he (the technician) did. At no point did he try to determine whether updating the drivers would solve the customer’s problem, or even what that problem was. The customer made a request, and the technician complied. He didn’t perceive the customer’s lack of technical knowledge as a factor. As the adage goes, “When someone asks you for a drill, what he really wants is a hole.” If you are in any business where the customer expects you to be more knowledgeable than him (and why would he hire you otherwise?) thinking is a core competency. I Can Look Up the Answer

Addressing the Value Gap – Living Expenses

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
6 months ago

The Value Gap is one of the most used phrases in exit planning. Simply stated, it’s the difference between what a business owner would realize if he or she sold the company today, and what they need to embark on a financially secure “next act” after business ownership. Both amounts can be determined with some accuracy by professionals. A qualified appraiser will analyze a company, its prospects, differentiation, markets, and comparative businesses and develop a value for the business. A good financial planner will look at savings, expected income, anticipated lifestyle expenses, life expectancy, and inflation and develop a scenario for the amount needed to fund those expectations. Simple, right? Financial plan requirements minus net proceeds from the business transfer equals the value gap. Testing the Value Gap If it is so simple, why do so few business owners do it? Instead, they value their businesses by hearsay, misestimate their lifestyle needs by a substantial margin, and think “I’ll probably be fine.” In fact, fewer than one owner in five has even documented any plan for their transition. Let’s take my favorite business owner, Bob of Bob’s Widgets Inc. Bob pays himself $120,000 a year and lives nicely on that amount. So he estimates that $10,000 a month should cover his lifestyle in retirement. To generate that, he needs $3,000,000 in savings with a 4% return. That means he has to sell his business for about $4,000,000, assuming 24% capital gains tax.  His company sold $7,000,000 in widgets last year, with a $500,000 pre-tax bottom line, so he is sure it’s worth at least $4,000,000. (We’ll discuss this valuation in my next column.) But wait a minute. Is Bob really making $120,000 a year? He drives a Ford Super-Duty company truck that cost $85,000. The payment is about $1,500 a month. Insurance, maintenance and fuel are paid for by the company. Bob’s Widgets Inc. also pays for Bob’s $750 a month health insurance, his $1,200 monthly life insurance, and his $7,200 annual personal tax preparation bill. “Sellers Discretionary Expenses” Bob’s company expenses are not only common, but he doesn’t really take all that much in comparison to some owners. Any advisor can tell stories of company-paid second homes, family trips and other expenses far less business-related than Bob’s. Without going beyond what would be considered “normal” owner perks, we can add about $58,000 a year in post-tax spending to Bob’s lifestyle. At his 4% return assumption, that adds another $1,450,000 in post-tax proceeds from the business to his need for a liquid asset base. Even if Bob’s assumption of a lower capital gains rate is correct (which is not the case in 90% of small business sales) he actually needs a sale price of at least $6,000,000 just to maintain his current lifestyle. Even Bob knows that his company can’t sell for $6,000,000. Without getting an appraisal or a formal financial plan, Bob has just had his first lesson in planning for the Value Gap.   This article was originally published by John F. Dini, CBEC, CExP, CEPA on

COVID Fatigue Unites Business Owners

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
8 months ago

Dealing with  COVID fatigue unites business owners. If that sounds strange to you, let me make my case. I’m not doing this to whine, but I want business owners who don’t have an existing support structure to know that they aren’t alone. I facilitate several peer groups of business owners. For decades, we’ve met monthly to discuss trends and issues in our businesses. It is typically a lively roundtable. Hiring, termination, customers, vendors, regulation, new initiatives, and finances present themselves at most, if not all meetings. The First Wave At the beginning of the pandemic, we increased our meeting frequency from monthly to weekly. It really helped with the news pummeling us every day. First, we had sanitation and control of infection. What should we do if an employee was diagnosed? What were the guidelines, or more accurately, the current guidelines regarding quarantine? How serious was this? Opinions ranged widely on the severity and need for action. Then came the lockdowns. Who decided that this was within the power of a mayor? Like so many regulations, it seemed to come without any discussion of the impact on small businesses. We never “blamed” the medical community. They were told to recommend the best way to slow the virus’ spread. They did. Our meetings became both strained and strange. We started living in two worlds. Some businesses were decimated, others were setting sales and profit records. The Light in the Tunnel Then came the relief bills. How did FFCRA work? Who has the poster? Will our employees all choose to go home at 2/3 pay? (Not very many did.) We traded policies and memos from HR advisors, CPAs, and law firms. Then the CARES act. BAM! $2 trillion flushed through the economy like a transfusion. We didn’t talk much about EIDL. The need to pay it back from PPP proceeds and running out of money early on focused us all on the Paycheck Protection Program. Of the 28 participants in the groups (myself included,) all 28 applied for and received PPP funds. We all shared application information and intelligence on which banks were handling it best. Again, we had concerns that the $600 unemployment bonus would dry up the recruiting market. It made things a bit more challenging, but not insurmountable. Most folks seem to prefer continuing employment. People who seek to milk the benefits to the last dollar aren’t the ones we wanted anyway. Of course, watching the collapse of the antiquated government infrastructure for unemployment may have influenced applicants as well. We traded information on remote working. How to keep employees engaged? Tips on contests, productivity tracking, and virtual technology. Those in essential industries never stopped working (see my post on 

Purpose After the Sale

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
9 months ago

Purpose after the sale is one of the biggest challenges for an exiting owner. Purpose – “Having as one’s intention or objective.” Many exit planning advisors discuss the three legs of the exit planning stool – business readiness, financial readiness and personal readiness. In our previous two articles, we focused on two of the “big three” components of a successful life after the sale, activity and identity. The third is purpose. So many advisors point to the 75% of former owners who “profoundly regret” their transition, and say it’s because they didn’t make enough money. To quote Mr. Bernstein in the great film Citizen Kane, “Well, it’s no trick to make a lot of money…if all you want is to make a lot of money.” I’ve interviewed hundreds of business founders. When asked why they started their companies, by far the most common answers are about providing for their families and having control of their future. Only a very small percentage say “I wanted to make a lot of money.” Decades of Purpose So what kept them working long hours and pushing the envelope after they had reached primary, secondary and even tertiary financial goals? Non-owners often chalk it up to greed, but Maslov’s hierarchy of needs drifts away from material rewards after the first two levels. Belonging, Self-Esteem and Self-Actualization may all have a financial component, but money isn’t the driver. For most owners, the driving motivation is this thing they’ve built. The company has a life of its own, but it’s a life they bestowed. They talk about the business’s growing pains and maturity. Owners are acutely aware of the multiplier effect the success of the company has on employees and their families. In a few cases, that multiplier extends to entire towns. That’s the purpose. To nurture and expand. In so many cases every process in the business was the founder’s creation. He or she picked out the furniture and designed the first logo. This aggregation of people breathes and succeeds on what the owner built. That’s why so many owners still put in 50 or more hours a week, long after there is any real need for their constant presence. This thing they created is their purpose. Purpose After the Sale It’s no surprise that so many owners find that 36 holes of golf each week, or 54, or 72, still isn’t enough to feel fulfilled. You can get incrementally better, but it doesn’t really affect anyone but you. Building a beautiful table or catching a trophy fish brings pride and some sense of accomplishment. Still, it never matches the feeling of creating something that impacts dozens, scores or hundreds of other human beings. That’s why we focus on purpose as the third leg of the personal vision. In the vast majority of cases, it involves impacting other people. Any owner spent a career learning how to teach and lead. Keeping those skills fresh and growing is a substantial part of the road to satisfaction. Purpose may involve church or a community service organization. It could be serving on a Board of Directors or consulting for other business owners. It might be writing or speaking. Purpose after the sale doesn’t require a 50-hour week, but it does require some level of commitment, and the ability to affect the lives of others.   This article was originally published by John F. Dini, CBEC, CExP, CEPA on

“Work From Anywhere” Comes Full Circle

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
10 months ago

Work from anywhere has been a necessity, an epithet, an obstacle, and an opportunity over the last 3 years. To paraphrase Aristotle’s axiom about Nature (“Horror Vacui”), business abhors a vacuum. Where one occurs, it is quickly filled. Work from anywhere started as a COVID-induced necessity. During the lockdowns of 2020-2021 (and longer in some places) we all had a crash course in video calling, VPNs, and virtual meetings. Employees quickly expanded the definition of anywhere. They tired of shunting the children off to a bedroom during conference calls, or using office-like backdrops to hide their kitchen cabinets. Soon they began changing their backgrounds to something more aspirational, like a mountain cabin or a scenic lake. From there it wasn’t much of a leap to make the mental shift from a make-believe environment to a physical one. Pretty soon employees were calling in from real mountain cabins. In many cases, they shifted to someplace where the cost of living was much lower than in their former metropolitan workspace. Work from Anywhere as an epithet and an obstacle As employees moved further afield from their office environment, bosses began to sound off. “We aren’t going to pay Los Angeles wages to someone who has a Boise cost of living,” was a commonly heard complaint.  Most put up with it because qualified help was getting harder to find. Hiring remotely was too hard a new skill to master. The complaints of employers grew louder as they began to ask employees to return to their former location of working activity. They made arguments about deteriorating corporate culture or a lack of mentoring opportunities. At the same time, stories surfaced about workers who were getting full-time paychecks from multiple employers, or who were “quiet quitting” by doing as little as possible. The “Great Resignation” forced many organizations to put up with it. If you wanted to keep employees, you needed to accommodate their demands. Then the work-from-anywhere poaching started. If an employee could do the job from a thousand miles away, why not just hire people from a thousand miles away? Now recruiters could dangle Los Angeles wages at candidates from Boise. Many employers saw work from anywhere as a curse costing them their best talent. Work from Anywhere as an Opportunity But as I said at the outset, business abhors a vacuum. Every action has a reaction. When the job can be done from anywhere, does that mean anywhere? If the higher cost of living centers can fill their needs by hiring people who are accustomed to earning less, why shouldn’t employers look at those candidates before the local talent? The Internet allows almost-instant communication across countries, what about across oceans? In the last few months, I’ve worked with employers who are hiring accountants in India, staffing recruiters in the Philippines, programmers in Argentina, support techs in Colombia, and screening nurses in Nicaragua.  None of these employers are multinationals. Each one fits the SBA’s definition of a small business. Their new employees are educated, English speaking, have the same hours as the employer, and are thrilled for the opportunity. Some are hired directly through a local placement agency. Others work for an organization in their home country that makes them exclusive to the client and promises to replace them if needed. Most of the wages appear to be about 50% more than the same job would pay in the country of residence, and roughly half of what the position in the U.S. would cost. Business has once again filled a vacuum. I wonder what is next?   This article was originally published by John F. Dini, CBEC, CExP, CEPA on

Personal Vision – Life After the Sale Part I

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
10 months ago

Life after the sale is often both the most important and most neglected factor in exit planning. Although (according to two different surveys in 2013 and 2022,) 75% of owners report regrets or unhappiness a year after the transition, exit plans continue to be constructed primarily around financial targets. In the event you haven’t heard this since you were five years old, “Money doesn’t fix everything.” Superficial Planning To be fair, most advisors include some conversation about “life after” in their planning conversations. Unfortunately, they are often satisfied with the features associated with an abundance of free time. Visiting the family, RV’ing through the country, playing 72 holes of golf a week, or seeing the great capitals of Europe can all be accomplished in the first year after ownership. When they attempt to broach the idea of longer-term activity, the client’s answer is often “Let’s get the money. Then I’ll worry about what to do with it.” It’s challenging to push beyond the client’s desire to focus on the most obvious goal, especially when it seems to enable everything that follows. Nonetheless, owners who are unhappy because they didn’t get enough money failed either to understand the realities of their transactions or the future cost of their life plans. That certainly isn’t 75% of planning clients. We are discussing the far greater number who have sufficient funds, but after their initial splurge of free time are unsure of what to do next. Emotional Preparation The first issue an exited owner faces is identity. “I used to own a company” quickly wears thin, and increasingly fades as years pass. “I’m retired” is a nebulous identity, and lumps them into a group with every wage earner who says the same. That’s a class they’ve proudly differentiated from for most of their lives. Some mental health professionals have compared the emotional reaction to missing ownership identity to post-partum depression. Their world has changed overnight. The principal subject of their interest is gone, and they aren’t sure what replaces it. Post-partum is characterized as including “a feeling of guilt, worthlessness, hopelessness or helplessness.” As an owner, there was always something else that needed their attention. Now there isn’t. Distress from discussing the daily news (which they now watch more frequently) used to be countered by a requirement to attend to the business. Now there is no business to attend to. The feeling of “What I do is important to a lot of people” has gone. Identity in Life After the Sale We encourage clients to at least mentally design their next business card. Handing someone your card is a shorthand version of declaring your identity. The first attempt by many is jocular but meaningless. “Part-time Philanthropist, Bon Vivant and Man About Town” is funny, but only once. “Grandparent, Outdoorsman and Classic Car Mechanic” is better. At least it describes real activities for further conversation. “Business Counselor and Chairman of the Board of (Charity Name)” describes an identity, ongoing contribution to something or someone, and a role of importance. It doesn’t have to be true today (we aren’t printing the business cards yet,) but it’s at least aspirational. Building a plan for life after the sale begins with establishing a future identity. There are several other components that we will cover in the next two articles.   This article was originally published by John F. Dini, CBEC, CExP, CEPA on

Exit Planning – Lifestyle and Legacy

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
11 months ago

Lifestyle and Legacy are two very different types of owner transition objectives. When we ask a client “What do you expect as a result of our exit planning?” the answer may be about the money, the time frame, or the impact on people. No matter how it is phrased, the response will break down into one of two major categories. It’s either about the owner’s future lifestyle, or the legacy that is left behind. Lifestyle Objectives Many clients want to exit to an enjoyable retirement. Usually, their primary concern is financial security. They want enough money to live comfortably, and to take care of their family. This is the reason many start their process by consulting with a financial planner, but lifestyle objectives can extend well beyond their bank account. A separate but related objective is time. It may be the time to travel without being chained to a laptop. The time to explore new things outside the business might result in formal education or training. Undertaking a new wellness regimen requires time, as does exploring a new hobby. Time might be used to engage in community service. An issue that is increasing in the Baby Boomer generation is the time to care for older family members. Another lifestyle issue is the ability to relocate. Moving to a place for favored activities, a better climate or to be closer to children (and grandchildren) often requires separation from the activities of the business. Legacy Objectives Some owners run their businesses for other than purely financial reasons. In these cases, they may be more concerned with how the business continues than the proceeds to be realized from a sale. Of course, a chief motivation for putting legacy at the top of the list is family succession. It might be a sense of obligation in a company that has already passed through multiple generations, or just a desire to provide future generations with the benefits of ownership. The role of the business in the community is also a legacy concern. The company could be a key employer in a small town, or a primary sponsor of a school or Little League. The owner’s name on the door or the preservation of long-standing business relationships can often affect the desirability of a buyer in the seller’s eyes. Environment, Social, or Governance (ESG) concerns have become increasingly important to some sellers. They want to make certain that the importance they place on these issues is shared by future ownership. Finally, the future growth and success of the business can be considered a legacy issue. An owner could have concern for the opportunities such growth provides to loyal employees, or whether innovations and proprietary processes will be expanded beyond their current limits. Lifestyle and Legacy Every owner’s objectives will have some combination of lifestyle and legacy concerns. They don’t necessarily conflict, but they involve differing perspectives.     This article was originally published by John F. Dini, CBEC, CExP, CEPA on

Celebrating Mr. Fezziwig

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
11 months ago

Since 2013 I’ve updated this piece about the underappreciated and forgotten boss of A Christmas Carol, Mr. Fezziwig. I hope that you enjoy it. Merry Christmas! Last week was the 180th anniversary of the publication of Charles Dickens’s A Christmas Carol (December 17, 1843). The immortal words of Ebenezer Scrooge are ingrained in the memory of the entire English-speaking world. I’d venture to guess that “Bah, Humbug!” can be correctly identified as to the source and speaker by over 99% of those reading this. The novella, serialized in five parts, was not a commercial success. Unhappy with the sales of his previous novel (Martin Chuzzlewit– no wonder!), he refused his normal fee from the publisher in favor of royalties on the proceeds, which proved disappointing. Critical reception was favorable, although it didn’t catch on in America until much later. The New York Times first published a review in 1863, 20 years after its publication in England. Like most of Dickens’ work, A Christmas Carol includes an indictment of the social inequalities of the Industrial Age; child labor, workhouses, and debtors’ prisons. It stands out, however, because of the lessons taught by its memorable ghosts, and the redemption of its main character in only 113 pages. During the Protestant Reformation in England and Scotland, Christmas had become a period of penance and reflection. A Christmas Carol is credited by many for leading the return to a celebratory holiday, focused on appreciation and thanks for family and friends. Modern Ebenezers Modern filmmakers have returned to the straight-ahead plot and uplifting storyline (not to mention the recurring royalties available year after year) with a frequency that helps stamp the legend in our psyche. Starting with the 1938 Reginald Owen version (originally released as “Scrooge”) and the 1951 Alistair Sim classic, the character of Ebenezer has been tackled by actors ranging from George C. Scott to Michael Caine (with the Muppets). Patrick Stewart, Kelsey Grammar, and Rich Little (in various celebrity impersonations) have taken a shot, as have Mickey Mouse, Mr. Magoo, the Smurfs, Barbie, Dora the Explorer, and the Flintstones. Let’s not forget the variants; Bill Murray in “Scrooged”, or Boris Karloff and Jim Carrey in their versions of “How the Grinch Stole Christmas.” In all, IMDB lists almost 200 filmed variants of the story. Unfortunately, the characterization of Scrooge has become ingrained in the minds of many as a stereotype of all bosses who dare to focus on margins and profit. How many employees identify their bosses with Fezziwig (Scrooge’s former employer,) who took pride in making his employees a happy group, even though Scrooge dismissed It as “only a little thing?” The Success of Mr. Fezziwig Instead of focusing on the things that allowed Fezziwig to spend lavishly on his employees (a motivated workforce, honesty, doing what’s right, profitability), we prefer to fantasize about a boss who expresses his sudden enlightenment by unexpectedly bestowing a dinner and an extra day off. Fezziwig is relegated to an afterthought, an overweight doting uncle with no visible reason for his success. Most of us are far more Fezziwigs than Scrooges. Oddly, if we celebrated the season of giving by presenting our employees with a list of all the “little things” we’ve done for them during the year, we’d be considered self-serving, and more akin to Ebenezer. We bow to the popular myth, give even more at the holidays, and hope it has some carryover of appreciation into the New Year. Just remember to remind your employees when you are being Mr. Fezziwig for the rest of the year. A Christmas turkey for Tiny Tim isn’t as important as being a good boss on the other 364 days.     This article was originally published by John F. Dini, CBEC, CExP, CEPA on

The Role of a Coach in Exit Planning

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
1 year ago

Defining the role of a coach on your exit planning team doesn’t just happen. Like any other aspect of working with consultants, you need to set expectations upfront. Many advisors like to characterize themselves as the “quarterback” of a transition planning team. I’ve always objected to that. We regard the business owner as the quarterback of the planning process. After all, the coach never gets sacked by a 300-pound defensive lineman. The advisor may want to win every bit as much as the business owner, but it’s the owner who actually has skin in the game. A Coach’s Responsibilities It’s one thing to say that you are a coach and another to act like it. Here are seven basic rules an owner should expect from the coach on a planning team.

Delegation and Depth – Company Readiness for Exit

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
1 year ago

Delegation and depth are critical when presenting your business as a buying opportunity. For many business owners, exit planning means getting the company ready for sale to a third party. There are a number of approaches to enhancing preparedness for a third-party sale. Assessing Readiness Some planning software products begin with a comprehensive survey of the owner’s impressions of readiness. Note that we say “impressions.” A Likert scale questionnaire that asks a client to rate their understanding of a statement and its possible implications with questions like “How confident are you that you know the value of your business?” and a ranking from “no understanding” to “extremely well” often creates more questions than answers. If an owner chooses “Fairly well,” for instance, does that mean he knows the value, or that he is fairly confident that he thinks he knows the value, or that he is really confident that he knows an approximate value? Nonetheless, some advisors will begin to build a plan around such subjective answers. In fact, many systems take these subjective answers and use them to produce a score and a subsequent evaluation with a dollar figure for the presumed worth of the business. Regardless of the accuracy of the owner’s responses, they have created a line in the sand regarding value. Keeping “Score” The next step is often to assess different areas of operations. Depending on the expertise of the advisor, this may focus on operating efficiencies, sales processes, marketing approaches, financial record keeping or product and customer mix. Then the advisor runs a second evaluation, presuming that these areas have a higher score. All this is intended to lead to one question. “Would you rather sell your business for $7,000,000 or for $12,000,000?” I know very few owners who would have the temerity to choose the first option, whether they have personal enthusiasm for embarking on a reorganization of their business or not. The methodology is legitimate. There is ample evidence that improved operations and greater profitability lead to a higher selling price. It may, however, create a scenario where the owner is boxed into the strategy that works best for the advisor, regardless of whether it matches the client’s objectives (“Get out as soon as possible,” for example) or the company’s capabilities. Delegation and Depth The first issue, an owner’s objectives, should be addressed by deeper discovery. That is what we preach and teach with our ExitMap® tools. The second, company readiness, is more a matter of delegation and depth. No business can embark on a comprehensive improvement process without a management team to implement it. That’s why we address Owner Centricity™ as the only area of company readiness that matters in the discovery phase of every engagement. If the client is already overwhelmed with personal responsibilities, new initiatives will just add more to an already over-full agenda. That’s a recipe for failure. We map out the management team starting with the owner’s responsibilities. Then we add those employees who are next in line for those duties, along with a 1, 2 or 3 score. One indicates that the employee is fully ready to assume the day-to-day activities of the job. A two means that the employee is generally familiar with the area, but not ready to assume primary responsibility. A three indicates that there is no knowledge or capability for this area. A 3 is also used when there just isn’t anyone available to train. Company Readiness Diagramming the management team in such a depth chart permits a far more comprehensive look at which improvements are possible now, and which will require additional training or recruiting. It also gives the advisor a better understanding of the areas the owner will have to delegate to make the business more saleable. In operational analysis, the capabilities of the management team are the principal determinant of the company’s readiness to grow. The owner’s willingness to discuss such delegation is by far the best indicator of his or her preparedness for any value enhancement efforts.   This article was originally published by John F. Dini, CBEC, CExP, CEPA on

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Exit Strategy – Harvest or Grow?

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
4 days ago

  In every internal transfer, whether to family or employees, the owner/seller has to make the harvest or grow decision. We’ll presume that your business has already reached a point where its value meets or exceeds your financial objectives as the owner. If growth is required in order for you to afford your next act, then that decision is less strategic than it is driven by your lifestyle requirements. If the company has already reached a substantial level of success, however, you may still be tempted to maximize cash flow until your departure. Deliberately reducing your cash flow by starting a process of equity transfer may not sound very appealing. The obvious question is “Why would I sacrifice my personal income in order to finance their acquisition of my company?” Why not harvest? The answer to that question revolves around the strength of your desire to control the process. Although staged internal transfers of equity almost inevitably require that the owners surrender some personal income at the outset, there is considerable psychological value in dictating the timing, method, and eventual proceeds of your exit. When compared to the listing and sale process of presenting the company to third-party buyers, an internal transfer allows the maximum of owner control. There is no exposing the finances of the company to strangers. It doesn’t require negotiating, sometimes against professional negotiators, or against low-bid opening offers. Since internal buyers are already familiar with the organization, it can circumvent the often excruciating process of due diligence. IAs a seller, you can look at your up-front funding of initial equity purchases as a sort of insurance policy. No lender will fund 100% of an employee purchase, and family purchases are rarely financeable. Transferring equity to the buyers, whether it is fully paid for or via a subordinated note, allows them to finance the balance of the purchase. The “insurance” factor is usually understood. In return for sacrificing some cash flow now, an owner can leave on a chosen departure date with 70% or more of the proceeds in hand. The longer you wait, the higher the probability that you will have to owner-finance the entire transaction. Why not grow? There are also a few arguments against a growth strategy. The chief one among these is time. If you are pressed for time due to the influence of one of the 

What is an Exit Plan?

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
1 week ago

“What is an Exit Plan” is an article I wrote ten years ago. It was just brought to my attention and I realized I never posted it to Awake for some reason. Here, with some updating, we celebrate its 10th anniversary. Exit planning is the buzzword for those who consult to Baby Boomer business owners. Business brokers, wealth managers and other professionals are adding “exit planning” to their marketing messages. It’s a logical reaction when over 5,000,000 Baby Boomers (about 3,000,000 in 2024) are preparing to leave their businesses. Not surprisingly, when a business broker creates an “exit plan,” it usually involves listing the business for sale to a third party. An attorney’s planning focuses on the legal documents that allow the transition of the assets of a company to new ownership. An accountant or financial planner will look closely at tax and inheritance issues, and an insurance broker offers products that reduce the risk of interruption or disaster. All these are important to the successful implementation of a plan, but each professional focuses on his or her specific skill set. If your shoulder hurts, you could go to an orthopedic surgeon, a neurologist, a general internist, a chiropractor, or a physical therapist. Each will have a treatment approach for a painful shoulder. Each will be different, based on his or her specialty. Each will reduce the pain at least somewhat, although some of them may or may not address the underlying cause. Similarly, there are many professionals who claim competence in exit planning. Each has a different area of expertise, and what they term exit planning tends to focus on those areas. A comprehensive exit strategy encompasses legal, tax, and risk management issues, but it also examines the operational issues of the company whose value is the underlying driver for everything else. Why do an Exit Plan? Before drafting the first document or embarking on a plan to spend the money from a sale, the business must first realize the proceeds of a transaction. That means it must find a buyer who will pay for it. That buyer could be a third party, but it might also be an employee, an employee group, or family members. Any third party considering the purchase of a business will do extensive due diligence. Their willingness to pay a premium for a company will depend on its track record of revenue growth, the stability of its margins, and how well-established its systems and customers are. If the company is larger than about twenty employees, they will look for supervisory and management talent who will stay after the sale. Regardless of size, a business that is highly dependent on the owner for revenue or making all key decisions will be deeply discounted or even impossible to sell. An exit plan should look at these factors and help to make the adjustments needed to realize full value. Selling to employees or family is often an attractive option because it allows the ownerto choose a retirement date, and price is less of an issue than financing terms. Unless you are willing to accept a promissory note for most of the price and feel secure that your successors can maintain payments over a long period, a plan for this kind of exit should begin at least three, and preferably five to eight years before the planned transfer date. What is an Exit Planner? An exit plan needs legal, tax, risk and wealth management expertise to be successful, but it also requires a practical examination of the operational strengths of your business. Selecting one professional to manage the efforts of everyone, and to help keep you on track, is a wise investment. In America, the average small business owner has nearly 75% of his or her net worth in the company (still true in 2024). The single biggest financial transaction of your life deserves special attention. ==================== This article was originally published by John F. Dini, CBEC, CExP, CEPA on

NLRB General Counsel Campaigns Against Non-Competes

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
1 week ago

Jennifer Abruzzo, the National Labor Relations Board’s (NLRB) General Counsel, is continuing her campaign against non-compete agreements. She just issued a memo announcing her office will seek more remedies for employees who are required to sign non-compete agreements. This follows previous statements in which she said non-compete agreements, which affect about 20% of US workers (30 million people), are unlawful. She has expanded her argument to include “stay-or- pay” provisions, stating they restrict workers’ job opportunities which (somehow) discourages unionizing. Non-Compete Agreements The NLRB is currently considering the legality of non-compete agreements under the National Labor Relations Act (NLRA) in a case involving an Indiana HVAC company. In a 2023 memo, Abruzzo explained why overbroad non-compete agreements are unlawful. She explained they hinder an employee’s ability to exercise their rights under Section 7 of the NLRA, which protects employees’ rights to take collective action including unionization. Abruzzo’s agenda has faced setbacks. In April 2024, the Federal Trade Commission (FTC) largely noncompete agreements, with some exceptions, however the ban was subsequently

A Time To Remember You Have A Seat At The Table

Maria Forbes of FIREPOWER Business Catalyst, LLC. is a member of XPX Atlanta
Maria C Forbes
FIREPOWER Business Catalyst, LLC.
3 weeks ago

As small business owners and leaders, we’re no strangers to the daily grind of comparison and competition. It’s easy to look at the success of others and wonder if we measure up. But this Thanksgiving, we’re taking a page out of Heather Holleman’s novel1, “Seated with Christ: Living Freely in a Culture of Comparison,” and the transformative words of Ephesians 2:6: “God raised us up with Christ and seated us with Him in the heavenly places in Christ Jesus.” In the hustle to prove our worth and carve out a place in the market, realizing that your seat at the table is already secured is revolutionary. This isn’t about your turnover, your team size, or the number of followers on social media. It’s about recognizing the value you bring to the table just by being you, backed by the firepower of your determination, creativity, and the unique vision only you possess for your business. The Overlooked Seats Comparison is the thief of joy in business, and it’s also the thief of innovation and growth. The environment of inauthentic seats fuels comparison, the moment you and your team stop eyeing the lane beside you is the moment you turbocharge your path forward. Your business isn’t like anyone else’s—for a reason. The individual strengths and talents within your team are your biggest asset, waiting to be unleashed. Recognize and harness the power of these unique capabilities to drive people-powered change. A Secure Seat on The Team Your team—the one you’ve built, trained, and grown—holds untapped potential. Just as we are seated with Christ in a place of honor and security, so too should our team members feel valued and vital to our mission. This Thanksgiving, let’s take a moment to express genuine gratitude for the diverse skill set each member brings to the table. When people feel valued, they’re more engaged, productive, and innovative. And that’s how a small business not only survives but thrives. The Power of People-Powered Change FIREPOWER Teams is founded on the belief that the power of a small business lies in its people. “Fuel your people power” isn’t just a motto; it’s a mission statement and a call to action. Reflect on how you can empower each team member to contribute their best this holiday season, fully aware that their seat at the table is as non-negotiable as yours. Thanksgiving is a time of gratitude, reflection, and community. As business owners, it’s a prime opportunity to reassess what we’re thankful for and how we express that gratitude through our actions and leadership. Let’s enter this season with a renewed commitment to value ourselves, our team, and all our unique contributions. Let’s reject the ceaseless comparison and instead focus on fostering an environment where everyone feels seated at the table—secure, valued, and ready to make a difference. The entrepreneurship journey is rarely easy, but with a team that genuinely feels like their efforts matter, there’s untold strength to be garnered. Your business, team, and vision have a secured seat at the table. Let’s give thanks for that incredible opportunity and the journey ahead. Conclusion Remember, the most sustainable growth comes from within. Thanksgiving is a time to rekindle our appreciation for the value we each bring to the table, reminding us that when we work together, there’s nothing we can’t achieve.

Exiting a “Time and Place” Business

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
1 month ago

“The purpose of middlemen in the marketplace is to provide time and place utility.” I remember the light bulb going on in Economics 101 when my professor said that.  Suddenly, I understood the concept of added value. Someone had to get the product to the customer. “After all,” the professor continued, “The footwear manufacturer in Massachusetts can’t sell a pair of shoes directly to someone in California. They can’t manufacture and handle thousands of customers. It would be a nightmare, and completely unprofitable.” The fact that Massachusetts was still known for shoe manufacturing gives you some idea of how long ago this took place. So long ago, in fact, that Zappos wasn’t even a word yet. The independent shoe retailer gave way to the department stores. In turn their shoe business was decimated by the specialty chain retailers. In fact, most shoe departments in Macy’s and others are actually chain operations within the store. Shoe sales moved into sporting goods stores and discounters. While the industry shifted multiple times, they all still provided time and place utility. Then came the Internet. Now the manufacturer can sell directly to consumers. In fact, they can eliminate several layers of middlemen, along with the mark-ups. Lately my area has been swamped with billboards saying “Mattress Dealers are Greedy. TN.com.” TN.com turns out to be My friends at Digital Pro has survived (and thrives) by their differentiation and service. The large, bright showroom is full of computers where they can show customers the effect of adjusting color balance or editing. They can print your lifetime memories on almost anything, from a key chain to a large metal panel. They can still give you prints made with permanent liquid ink, not the water soluble powder used by most printers. In addition, they can do all of this online because they’ve invested in the technology necessary to keep up with the “convenience-based” competitors. As the cost of digital printers fell, professional photographers invested in their own machines. Digital Pro Lab has replaced their business with consumers who want to discuss their special moments, choose how to preserve them, and hold the results in their hands before they pay. In an industry where the number of time and place based outlets has fallen by over 90% in the last decade, Digital Pro Lab has beaten the big boys with product differentiation and service. When the time comes for planning an exit, they will have options.       This article was originally published by John F. Dini, CBEC, CExP, CEPA on

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